Rosbank, the first systemically important Russian bank, has launched a pilot program for cross-border payments using cryptocurrency. Corporate and private clients have already started using the service to make transactions.
In order for a Russian individual or company to use the Rosbank service, they must first complete the Know Your Client (KYC) verification process with both Rosbank and B-crypto, a fintech service providing support for crypto settlements. The importer must also stipulate in their contracts with suppliers that payments via cryptocurrency are possible and register the recipient’s crypto wallet.
After the agreement between importer and B-crypto is signed, the importer can deposit fiat funds to an account with Rosbank, which then transfers money to B-crypto. B-crypto then uses the transferred funds to buy cryptocurrency in “friendly” countries and transfers it to the foreign supplier.
Cross-border cryptocurrency transfers raise multiple concerns regarding the circumvention of sanctions. For example, the European Union introduced a new set of sanctions in October that includes a complete ban on cross-border crypto payments between Russia and the EU.
In response, the Central Bank of Russia (CBR) has warned about the perils of allowing the use of cryptocurrencies in the Russian economy. Ksenia Yudaeva, the First Deputy Chair of the CBR, said that Russian businesses using cryptocurrencies in cross-border settlements must do so in a way that ensures crypto does not spread throughout the Russian financial system.
The State Duma is currently debating a bill related to the legalization of cryptocurrency mining and experimental legal regimes. The draft law on experimental legal regimes will include rules governing the use of cryptocurrency exchanges for cross-border transactions. The CBR will be tasked with regulating crypto exchanges interested in facilitating cross-border transactions.
The Russian Ministry of Finance will help new exchanges get established to provide a workaround to the sanctions Western nations have placed on Russia. Cryptocurrency payments offer an additional route for cross-border settlements, however, Vladimir Chistyukhin, First Deputy Chair of the Bank of Russia, said that cryptos will “not become a panacea for international payments.”
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